Question

The following accounting events (A– I) affected the assets, liabilities, and owners’ equity of Pauley Enterprises during the year ended September 30, 2010.
A. Capital stock sold for $ 25,000 cash.
B. Raw materials are purchased on account for $ 50,000.
C. Raw materials of $ 42,000 are issued into production.
D. Assembly workers’ wages of $ 11,500 are paid in cash.
E. Manufacturing overhead of $ 17,700 is incurred, but not paid.
F. Products costing $ 47,500 are finished.
G. Products costing $ 36,250 are sold for $ 50,750 in cash.
H. Selling expenses of $ 7,500 are paid in cash.
I. A dividend of $ 2,500 is paid to the owners.
Required
1. Determine the effect of each of the preceding events on the accounting equation.
2. Prepare the general journal entries to record each of these events. You may want to set up T- accounts to keep track of some accounts.
3. Prepare the income statement for the period.
4. Prepare the statement of cash flows for the period (ignore beginning balance).